Your last investment purchase - Why did you buy it?

What was the upside to buying your last investment purchase?

Did you buy for capital gain in a rising market?

Did you buy for cashflow?

Some examples with figures would be good.

There are four parts to my answer (just to be different and a p.i.t.a)

1. Our last conscious IP purchase was a 2 x 1 unit in Frankston Central for $155k in 2004. To some this will be very surprising considering how much cr@p I come out with on this forum. "What; you haven't bought anything in the last 6 years??"
It was neg geared, but it was cheap and we bought it with the belief that Frangers will be a cap growth winner over the longer term. I wished I's spent a bit more and bought a house on a development block, but we were strapped at the time.
The upside has been the cap growth and the overall rentability of it.

2. We bought our current PPoR block from our neeighbor (and friend) in 2005 for $300k on a long settlement and small deposit. We know that the cap growth for blocks with views in Dromana will be excellent, because there are almost none left. Testament to that belief is the sale of the block next door for $450k this week. Upside is we have made $150k (50%) cap growth in 5 years. Downside is no income, but we knew this was part of that deal.

3. We bought a cafe/take-away and reception business in mid 2008 for cashflow. This is a fully managed business with 10 staff including manager. Bought for cashflow only. Upside; cashflow.

4. We bought the tyre and service centre business in August 2009 for cashflow. Has a staff of 3 including manager, and I work there as well. Upside; cashflow.
 
There still there col....

depends on what stock though the cheapies are cheap and have good yeilds...

Yes it does depend on what stock...personally there's studio, 1 & 2 brm units in S**t areas achieving 8%, but I know based on the last bust, that there's still hurt coming, & those units will achieve 10% + returns easily in 12 months time based on lower purchase prices. Problem with some of these IPs is that the high returns are gobbled up with huge BC fees esp. when you've got pools & the like in the complexes.

I'm looking for duplexes with higher land value (ref. similar strategy to Rixter).
 
The 8%s will more likely be found in flats and units I guess

How did you achieve 6% return on such a high purchase - $600k I think you said - is this IP dual occupancy (2 houses on 1 site) or block of 3 units or something? Especially when you said it's inner city Melb!
 
Latest one settles next week - 2br unit; Rockhampton $133k, rents $240pw.

I have another in complex last valued at $180k getting $280pw. Depreciation approx $6k pa.

Should achieve similar rent/depreciation after a max $5k spend.

Purchased for almost instant equity and CF+.


Hows the b/c fee's? If its the one's im thinking of once all the fee's etc are taken its leaves about a clear rent of 150ish p/w
 
Hows the b/c fee's? If its the one's im thinking of once all the fee's etc are taken its leaves about a clear rent of 150ish p/w

They are high, but not as bad as some of the ones I hear about down here! Around $2700pa; works out to be around $50/wk.
Rates $26/wk
Insurance $5/wk
Management $19/wk
Interest $8400 ($120k@7%) - $161.50/wk
Totals = $261.50wk
So pre-tax, costing me $21.50/wk currently

Once I have the new kitchen in and painting finished rent should go to $260/$270wk. Management fees will go up $2/wk, but rest will be the same making it CF+, not by a heap, but still enough to buy a scratchie or two a week! :)

It gives me a pretty good after tax return, fully furnished so depreciation is higher than most properties.
 
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